Provisions are likely to be introduced to the Income Tax Act in the upcoming budget allowing seizure of trustees' personal assets in case of the violation of charitable trust norms, reported Business Standard.
The new provisions will allow authorities to take action if there’s a breach of objectives governing registered charitable trusts, a government source told media.
At present, the responsibility of any such violations falls on the trusts themselves leaving the trustees immune to any responsibility. This situation is expected to change with the introduction of new changes that will be part of the Finance Bill 2020, the report added.
“Public trusts have become the easiest route to launder money due to lack of governance and proper monitoring. The operation of a trust is mostly opaque and there is no system to track them,” a source told media.
Further, the government is also looking to put a threshold limit of not more than ten percent of income for foreign donations by charitable trusts and non-profit institutions, the report said. Also, the government is seeking suggestions to end the current tax exemption enjoyed by only a limited number of charitable institutions based on the year of their establishment by providing a sunset clause that will give such institutions three years to wind up investments, said the report.
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